Sold, To You in the Back!

admin
It's Friday morning, March 7, inside National Powersports Auctions' massive warehouse facility in Poway, Calif. Although it's not yet spring, the sun is already glaring down on the industrial complex in the rural outskirts of San Diego County, where NPA is headquartered.

The auction's begun, and some trailers out front are up first — this isn't the main product, but they go quickly. A motorized cart carrying the auctioneer and two others slips through a gate and back to where the motherload sits. Inside the main office, bidders sidle up to a counter to get their bidder badges or to complete on-site registration. Nearby tables hold doughnuts by the dozen and a huge urn of coffee. A large flat screen TV broadcasts the current simulcast auction.

Most of the 408 bidders — in person and via Internet simulcast — have likely previewed the units they're after. Each of the 1,475 units up for auction that day were available for preview the day before, in person or online. It's a record day for attendance, NPA officials say, an observation that reflects the growth of not only the used market but the auction business.

"With the compression of the retail market on new bikes, [dealers] need to be thinking pre-owned," says Justyn Amstutz, one of NPA's three principals. "All new units are the same; every used bike is different. Used bikes drive a different customer through the door who can be sold a different type of product or upsold to a new bike depending on credit worthiness."

The process can also work in reverse — those who don't qualify for a new bike can be offered something from the used lineup, Amstutz adds.

Six Million Used Bikes
Whatever the case, the used market is ripe for the picking. According to Dealernews senior research editor Don Brown, there are about 6 million streetbikes currently in use. However, industry estimates point out that only half of all powersports retailers focus on used sales and service. And about 13 percent of sales at new-unit retailers are for used bikes.

Auction companies like NPA serve as a doorway into this used market by offering bikes consigned by financial institutions and dealerships. Instead of relying on classified ads and private party sales, dealers can go to auction (for free) where repos from the likes of Harley-Davidson Financial Services, Honda Financial Services and GE Money are on the block next to dealer consigned units.

NPA's auctions run about 35 percent straight dealer consignment, the rest coming from the finance companies. Of the overall total, about 90 percent are used and the remainder are non-current new. These figures have changed drastically since 2004, Amstutz says, when dealer consignments were nil.

Originally started by the principals of House of Honda in El Cajon, Calif., NPA is now run by Amstutz, Jim Woodruff and Cliff Clifford. In addition to the Poway location, it runs auctions in Atlanta, Cincinnati and Dallas. Amstutz reports that the company has experienced month-over-month growth, and at its auctions before Dealer Expo in February, moved about 5,000 used bikes.

Companies like NPA sit at the intersection of the old and new worlds of powersports retailing. With new-unit sales in a slump, dealers need to look to other sources of revenue. And with used bikes often fetching margins that average around 20 percent, they are an attractive option.

The dealers attending the March 7 auction were apparently aware of this.

NPA splits its auction inventory up into three separate auctions. A large warehouse holds all the on-road bikes, separated into different sections. One area holds all the units NPA handles for Honda Financial, another the bikes from Harley-Davidson Financial. The rest of the space devoted to miscellaneous motorcycles. Outside sit all the off-road bikes, PWC and ATVs.

One auction handles all the American iron and another the metric, while a third covers off-road machines and PWC outside. Each auction gets its own auctioneer, who sits in the motorized auction cart that crawls slowly down the aisle, motormouthing one unit at a time. Two other employees sit on the cart, one handling the online auction, the other the in-person bidding.

As the cart moves from bike to bike, the bidders consult their auction sale catalog referencing the bikes they most likely picked out well beforehand as good buys. The energy on the auction floor is palpable, especially when you're standing midway between the metric and domestic auctions where the chatter is punctuated by the loud "Huhs!" of the ring men spotting bids. At this rate, a bike is sold about every 20 seconds, or about 100 an hour.

Each bid opens at a price close to the unit's reserve price, an amount set by the financial institution that holds the paper or by the dealer consignor. Amstutz says dealers new to the process should have no fear; they just need to talk with any of the NPA staff for a primer on how the auctions work.

Even for the auction neophyte, the whole process is pretty intuitive. If a person has ever spent any time on eBay, he or she will know how it works — it's just in an accelerated format. Those choosing to bid via the Internet enter real-time bids that track with the pace of the live auction.

At this particular auction GE Capital Solutions was running a special on its units, offering 30 days of interest-free flooring on the particular model. A hang tag detailing the offer hung off each of these machines.

The action is easily picked up, and seeing what the bikes close for gives some good insight to what's happening with used-bike values. Watch enough auctions close on a particular model (online or in person), figure in condition and compute dealer margin, and you can get a good idea of the current used value of that model.

Other Ways To Buy/Sell
NPA also runs an online eSale auction that runs exactly like an eBay sale. Dealers can bid on motorcycles over the course of several days, and special software curtails potential auction snipers from making last-minute bids by automatically tacking on more auction time if a late bid is submitted.

The company also runs a dealer-to-dealer Web site for Harley-Davidson and a factory-to-dealer program for Yamaha.

At the live auction, bidders follow the auction cart, placing bids on their selected units. Once a unit is sold, it's tagged, and the dealer can either continue with other auctions or start arranging to have his unit hauled out. Some, like Southern California dealers Lifestyle Cycles and Santa Barbara Harley-Davidson, come with huge rigs to truck away their goods. Several other flatbed trailers and trucks sat waiting in a nearby parking lot. NPA also works with a myriad of shipping companies that dealers can use to get the bikes back home.

The auction moves at an amazing clip, and by noon on March 7, the two inside sales were blowing through inventory while the outside, off-road auction moved along swiftly under the full glare of the sun.

Now finished, many dealers were wheeling units out the gate to waiting trucks, while inside the main offices NPA employees were dealing with payments and titling work and checking out bidders.

In a week's time, the whole affair would relocate to Dallas and then, a week after that, to Atlanta, and so on.